MAGAZ LUIZA ON (MGLU3) SWOT Analysis / TOWS Matrix / MBA Resources
Retail (Department & Discount)
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for MAGAZ LUIZA ON (Brazil)
Based on various researches at Oak Spring University , MAGAZ LUIZA ON is operating in a macro-environment that has been destablized by – competitive advantages are harder to sustain because of technology dispersion, wage bills are increasing, increasing transportation and logistics costs, talent flight as more people leaving formal jobs, banking and financial system is disrupted by Bitcoin and other crypto currencies, challanges to central banks by blockchain based private currencies, there is backlash against globalization,
technology disruption, digital marketing is dominated by two big players Facebook and Google, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that MAGAZ LUIZA ON can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the MAGAZ LUIZA ON, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which MAGAZ LUIZA ON operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of MAGAZ LUIZA ON can be done for the following purposes –
1. Strategic planning of MAGAZ LUIZA ON
2. Improving business portfolio management of MAGAZ LUIZA ON
3. Assessing feasibility of the new initiative in Brazil
4. Making a Retail (Department & Discount) sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of MAGAZ LUIZA ON
Strengths of MAGAZ LUIZA ON | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of MAGAZ LUIZA ON are -
Ability to lead change in Retail (Department & Discount)
– MAGAZ LUIZA ON is one of the leading players in the Retail (Department & Discount) industry in Brazil. Over the years it has not only transformed the business landscape in the Retail (Department & Discount) industry in Brazil but also across the existing markets. The ability to lead change has enabled MAGAZ LUIZA ON in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Learning organization
- MAGAZ LUIZA ON is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at MAGAZ LUIZA ON is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at MAGAZ LUIZA ON emphasize – knowledge, initiative, and innovation.
Operational resilience
– The operational resilience strategy of MAGAZ LUIZA ON comprises – understanding the underlying the factors in the Retail (Department & Discount) industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
High brand equity
– MAGAZ LUIZA ON has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled MAGAZ LUIZA ON to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Strong track record of project management in the Retail (Department & Discount) industry
– MAGAZ LUIZA ON is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Effective Research and Development (R&D)
– MAGAZ LUIZA ON has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – MAGAZ LUIZA ON staying ahead in the Retail (Department & Discount) industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Highly skilled collaborators
– MAGAZ LUIZA ON has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Retail (Department & Discount) industry. Secondly the value chain collaborators of MAGAZ LUIZA ON have helped the firm to develop new products and bring them quickly to the marketplace.
Superior customer experience
– The customer experience strategy of MAGAZ LUIZA ON in Retail (Department & Discount) industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Analytics focus
– MAGAZ LUIZA ON is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the Retail (Department & Discount) industry. The technology infrastructure of Brazil is also helping it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Sustainable margins compare to other players in Retail (Department & Discount) industry
– MAGAZ LUIZA ON has clearly differentiated products in the market place. This has enabled MAGAZ LUIZA ON to fetch slight price premium compare to the competitors in the Retail (Department & Discount) industry. The sustainable margins have also helped MAGAZ LUIZA ON to invest into research and development (R&D) and innovation.
Low bargaining power of suppliers
– Suppliers of MAGAZ LUIZA ON in the Services sector have low bargaining power. MAGAZ LUIZA ON has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps MAGAZ LUIZA ON to manage not only supply disruptions but also source products at highly competitive prices.
Digital Transformation in Retail (Department & Discount) industry
- digital transformation varies from industry to industry. For MAGAZ LUIZA ON digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. MAGAZ LUIZA ON has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Weaknesses of MAGAZ LUIZA ON | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of MAGAZ LUIZA ON are -
Lack of clear differentiation of MAGAZ LUIZA ON products
– To increase the profitability and margins on the products, MAGAZ LUIZA ON needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow to strategic competitive environment developments
– As MAGAZ LUIZA ON is one of the leading players in the Retail (Department & Discount) industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Retail (Department & Discount) industry in last five years.
Capital Spending Reduction
– Even during the low interest decade, MAGAZ LUIZA ON has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the Retail (Department & Discount) industry using digital technology.
No frontier risks strategy
– From the 10K / annual statement of MAGAZ LUIZA ON, it seems that company is thinking out the frontier risks that can impact Retail (Department & Discount) industry. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
High bargaining power of channel partners in Retail (Department & Discount) industry
– because of the regulatory requirements in Brazil, MAGAZ LUIZA ON is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the Retail (Department & Discount) industry.
Aligning sales with marketing
– From the outside it seems that MAGAZ LUIZA ON needs to have more collaboration between its sales team and marketing team. Sales professionals in the Retail (Department & Discount) industry have deep experience in developing customer relationships. Marketing department at MAGAZ LUIZA ON can leverage the sales team experience to cultivate customer relationships as MAGAZ LUIZA ON is planning to shift buying processes online.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, MAGAZ LUIZA ON is slow explore the new channels of communication. These new channels of communication can help MAGAZ LUIZA ON to provide better information regarding Retail (Department & Discount) products and services. It can also build an online community to further reach out to potential customers.
Skills based hiring in Retail (Department & Discount) industry
– The stress on hiring functional specialists at MAGAZ LUIZA ON has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Slow decision making process
– As mentioned earlier in the report, MAGAZ LUIZA ON has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Retail (Department & Discount) industry over the last five years. MAGAZ LUIZA ON even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Interest costs
– Compare to the competition, MAGAZ LUIZA ON has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Need for greater diversity
– MAGAZ LUIZA ON has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
MAGAZ LUIZA ON Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of MAGAZ LUIZA ON are -
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. MAGAZ LUIZA ON can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Creating value in data economy
– The success of analytics program of MAGAZ LUIZA ON has opened avenues for new revenue streams for the organization in Retail (Department & Discount) industry. This can help MAGAZ LUIZA ON to build a more holistic ecosystem for MAGAZ LUIZA ON products in the Retail (Department & Discount) industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Using analytics as competitive advantage
– MAGAZ LUIZA ON has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Retail (Department & Discount) sector. This continuous investment in analytics has enabled MAGAZ LUIZA ON to build a competitive advantage using analytics. The analytics driven competitive advantage can help MAGAZ LUIZA ON to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Lowering marketing communication costs
– 5G expansion will open new opportunities for MAGAZ LUIZA ON in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Retail (Department & Discount) industry, and it will provide faster access to the consumers.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help MAGAZ LUIZA ON to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, MAGAZ LUIZA ON can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help MAGAZ LUIZA ON to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, MAGAZ LUIZA ON can use these opportunities to build new business models that can help the communities that MAGAZ LUIZA ON operates in. Secondly it can use opportunities from government spending in Retail (Department & Discount) sector.
Buying journey improvements
– MAGAZ LUIZA ON can improve the customer journey of consumers in the Retail (Department & Discount) industry by using analytics and artificial intelligence. It can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for MAGAZ LUIZA ON to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for MAGAZ LUIZA ON to hire the very best people irrespective of their geographical location.
Better consumer reach
– The expansion of the 5G network will help MAGAZ LUIZA ON to increase its market reach. MAGAZ LUIZA ON will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Leveraging digital technologies
– MAGAZ LUIZA ON can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects MAGAZ LUIZA ON can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Use of Bitcoin and other crypto currencies for transactions in Retail (Department & Discount) industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for MAGAZ LUIZA ON in the Retail (Department & Discount) industry. Now MAGAZ LUIZA ON can target international markets with far fewer capital restrictions requirements than the existing system.
Threats MAGAZ LUIZA ON External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of MAGAZ LUIZA ON are -
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of MAGAZ LUIZA ON.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for MAGAZ LUIZA ON in the Retail (Department & Discount) sector and impact the bottomline of the organization.
Increasing wage structure of MAGAZ LUIZA ON
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of MAGAZ LUIZA ON.
Regulatory challenges
– MAGAZ LUIZA ON needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Retail (Department & Discount) industry regulations.
Stagnating economy with rate increase
– MAGAZ LUIZA ON can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the Retail (Department & Discount) industry.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. MAGAZ LUIZA ON needs to understand the core reasons impacting the Retail (Department & Discount) industry. This will help it in building a better workplace.
Environmental challenges
– MAGAZ LUIZA ON needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. MAGAZ LUIZA ON can take advantage of this fund but it will also bring new competitors in the Retail (Department & Discount) industry.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. MAGAZ LUIZA ON will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Technology acceleration in Forth Industrial Revolution
– MAGAZ LUIZA ON has witnessed rapid integration of technology during Covid-19 in the Retail (Department & Discount) industry. As one of the leading players in the industry, MAGAZ LUIZA ON needs to keep up with the evolution of technology in the Retail (Department & Discount) sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Consumer confidence and its impact on MAGAZ LUIZA ON demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in Retail (Department & Discount) industry and other sectors.
Shortening product life cycle
– it is one of the major threat that MAGAZ LUIZA ON is facing in Retail (Department & Discount) sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Easy access to finance
– Easy access to finance in Retail (Department & Discount) industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. MAGAZ LUIZA ON can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Weighted SWOT Analysis of MAGAZ LUIZA ON Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at MAGAZ LUIZA ON needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of MAGAZ LUIZA ON is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of MAGAZ LUIZA ON is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of MAGAZ LUIZA ON to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that MAGAZ LUIZA ON needs to make to build a sustainable competitive advantage.